ENHANCING EFFECTIVENESS OF PUBLIC PROCUREMENT SYSTEMS: THE CASE OF UGANDA

ENHANCING EFFECTIVENESS OF PUBLIC PROCUREMENT SYSTEMS: THE CASE OF UGANDA Presented By Mrs. Cornelia K. Sabiiti – Director, Legal and Compliance, PPDA Presented at the East African Procurement Forum held at Munyonyo Commonwealth Resort, Kampala 10th – 12th June 2008

Overview of the Presentation • Legal and institutional framework of the procurement reforms in Uganda. • Monitoring mechanisms • Enforcement mechanisms • Operating Systems • Successful Measures • Challenges • Way Forward

Legal Framework of the Public Procurement System • Key features of the procurement legal reforms • PPDA Act of 2003 abolished the Central Tender Board and established PPDA as the national regulatory body for public procurement. Followed by PPDA Regulations 2003 and Guidelines. • PDEs mandated to undertake unlimited procurement and disposal subject to standard practices and procedures prescribed by law. • Local Governments (Amendment) Act 2006 harmonized local government procurement with national standards. Followed by LG (PPDA) Regulations and LG Guidelines.

Application of PPDA Act • PPDA Act & Regulations apply to: • Public Finances of a Procuring and Disposing Entity; • Resources for national programmes under development cooperation agreements such as: Counterpart transfers and Co-financing; • Procurement and disposal activities of Entities of Government within and outside Uganda; and • Procurement and disposal activities of Entities not of Government but which benefit from public funds. • Only Exception is where the PPDA Act conflicts with an international agreement.

Ministry of Finance PPDA PDE PDE PDE PDE AO appoints the Contracts Committee approves the Evaluation Committee conducts evaluations PDU manages procurement activities reports to User Department User Department User Department Initiate procurements Institutional Framework of the Public Procurement System

Key Stakeholders • Parliament • Oversight agencies - Office of the Auditor General, Inspector General of Government • Enforcement bodies – CID, DPP • Ministry of Finance, Planning and Economic Development • Public Procurement and Disposal of Public Assets Authority (PPDA) • Procuring and Disposing Entities • Providers – Suppliers, Contractors and Consultants • The Public, such as civil society, the media, NGOs/CBOs etc. • The Development Partners

Monitoring Mechanisms • PPDA Monitors through; • Review of the monthly/quarterly reports submitted by PDEs. • Procurement audits (reviews) that contain agreed action plan for corrective actions and follow up of their implementation. • Compliance checks / inspections. • Compliance assessment and Rating of PDEs on specific compliance indicators. • Civil Society and the general public.

Key Compliance Indicators • Performance of the Procurement structures • Annual Procurement Planning • Procurement/Disposal Methods & Thresholds • Statutory time limits / Periods • Publication of opportunities on PDE notice board & PPDA website on www.ppda.go.ug • Standard Bidding Documents and Standard Formats • Pre-Bid meetings & the Evaluation process • Procedures for Award of contracts • Contract management

Enforcement Mechanisms • PPDA enforces compliance with the law by: • Investigation of procurement cases where malpractice is suspected and recommending disciplinary action against the officers responsible for implementation by AO, PS/ST, Head of Public Service, MOLG, IGG, etc. • Submission of findings and recommendations from audits and investigations to the Auditor General for Parliamentary oversight. • Hearing of administrative review appeals (2 Tier Complaints System) • Suspension of Providers who breach the Ethical Code of Bidders • Liaison with law enforcement agencies on investigation and prosecution of Offences under the Act e.g. for failure to answer summons, provide information, influence peddling & fraudulent or corrupt acts.

Enforcement Mechanisms • In cases of persistent or grave non compliance, PPDA may recommend the following disciplinary measures to a Competent Authority: • Suspension of Officers concerned. • Replacement of the head/member of the PDU. • Replacement of the Chairperson/member of the CC. • Disciplining of the Accounting Officer. • Transfer of Procurement & Disposal function to a third party provider or another PDE. • Withholding funds of the PDE.

Operating Systems • Administrative Review(2 Tier System). May be sought by a bidder on account of any breach of the Act, Regulations, Guidelines or standard bidding documents by a PDE. • Bidder to submit Complaint to the AO within 15 working days from the date the bidder first became aware of the circumstances giving rise to the complaint. • AO to suspend the procurement if continuity will worsen the situation or result in incorrect contract award • AO to make a decision within 15 working days giving reasons for decision with copy to PPDA. • Bidder may appeal to PPDA if AO fails to take a decision within 15 days or if Bidder is dissatisfied with the decision of the AO (within 10 days)

Administrative Review contd • Notify the respective PDE & all interested bidders • Suspend the procurement or disposal • Investigate whole process. • Issue decision within 21 working days; • Dismissing complaint • Upholding complaint and annulling in whole or part procurement process and any other corrective action/remedies. • Bidder to appeal to High Court if still dissatisfied with PPDA decision.

Operating Systems contd • Suspension of Providers • A CC may recommend to PPDA the suspension of a provider. PPDA carries out investigations and takes a decision to suspend or not. • A provider subject to a suspension recommendation, shall be permitted to submit information or evidence in his or her defense. • The period of suspension shall be at the discretion of PPDA • Suspension applies to “Successors in Interest”.

Operating Systems contd • Waivers/Deviations • PPDA may permit a deviation from the use of procurement/disposal method, rule or document by a PDE. Reg. 61 • A PDE applying for a deviation/waiver is required to indicate: • The method, rule or document for which the deviation is required; • The reasons for the deviation; • An explanation of the proposed alternative method, rule or document and how it differs form the standard; • How the PDE intends to comply with the standards and principles of the PPDA Act as far as is practical.

Waivers/Deviations contd • Criteria followed by PPDA • Whether the circumstances in the application fall under PPDA Reg. 339 i.e impractical/uneconomical, market conditions, specialised requirements under harmonised international standards. • Whether User dept/Contract manger has provided to CC the details giving rise to the circumstances. • Whether signed CC minutes recommend waiver be granted. • Whether the estimated cost of the procurement/disposal is indicated and whether the proposed change of method or rule will achieve value for money; • Whether the PDE is compliant to other requirements of the PPDA Act including having a procurement plan, current pre-qualified list and is up to date in submission of reports.

Waivers/Deviations contd • Approval will not be given as remedy for poor planning or where normal procedures have not been maintained. • Entities to apply separate procedure for emergencies. • The Authority may accredit an alternative procurement and disposal system where PDE has a status which requires alternative or additional regulations.

Successful Measures • System is rules based and time bound – detailed procedures, conditions and clear time frames. • A defined reporting regime to PPDA for accountability; monthly for CG PDEs and quarterly for LG PDEs. • Clear rules of record keeping with standard formats and check lists. • Issue of Standard Bidding Documents and formats to promote consistency in all PDEs and uniform treatment of bidders. • Ethical Codes to guide the system of sanctions and penalties for both public servants & providers.

Successful Measures contd • Segregation of Responsibilities There is clear separation of functions and responsibilities among the following: • Accounting Officer • Contracts Committee • Procurement and Disposal Unit • User Departments • Evaluation / Negotiation Committee • PPDA as a Regulator does not procure above the micro threshold but contracts this function to an independent agent.

Successful Measures contd • Procurement Planning • Issued Standard Procurement Plan formats to all PDEs and budget call circular requires all AOs to prepare Annual Procurement Plans to ensure that the procurement budget is integrated with the approved expenditure programme of the entity • Promoted the use of framework contracts • Requirement to aggregating requirements and avoiding splitting • Issued prices for common user items to guide PDEs

Successful Measures contd • Delegation of functions within a PDE Purpose of Delegation is to promote efficiency; Cost effectiveness; Type of work; geographically distant units where delegation reduces logistical problems. Delegation is to a sub division or a member of staff. • Contracting out to another PDE • Third Party Procurement Agents

Successful Measures contd • Fair, transparent and accountable processes leading to contract award: • Open Notification to the public of bid opportunities, through newspaper of wide circulation and notices placed on Entity’s notice board and on PPDA website • Public opening of bids for open & restricted bidding. • Mandatory Pre-bid meetings for large and complex procurements • Display of the Best Evaluated Bidder Notice for 5- 10 working days • Confirmation of full funding and completion of administrative review by AO before contract signature • Solicitor General to clear contracts above Ug. Shs. 50m

Challenges • The poor record keeping culture has resulted in lack of comprehensive statistics on the value of goods, services and works procured and on the key indicators under procurement process. This is exacerbated by the limited use of electronic commerce. • There are still problems of political interference with procurement process, particularly at local government level. • The limited enforcement powers of PPDA limits and limited punitive measures limit compliance • Overlap of mandates with other bodies and existence of Parallel procurement systems at local government level e.g. NAADS creates conflicts in implementation of the law.

Challenges contd • Disposal of Public Assets • Ambit of definition of disposal and public assets • Poor disposals planning and PDEs do not follow procedures of identification of assets for disposal including establishment of Boards of Survey. • Two Valuations to be done to ascertain reserve price of asset to be disposed. • Scope of the PPDA Act does not cover stores and inventory management resulting in weak links and loopholes between procurement, stores and disposal. • Poor Contract Management due to poor specifications, and lack of qualified professionals to perform quality assurance.

Challenges contd • Need to strengthen monitoring and evaluation mechanisms of the procurement system. • Regulation of classified procurements of Ministry of Defence and National Security organs. • Lack of comprehensive statistics on the value of goods and services procured and on the procurement process. • No evidence that the reforms have been successful in reducing the incidence of corruption in public procurement and the Prevalence of corruption jeopardises Government’s ability to manage high-value projects.

Challenges contd • Addressing complaints by non bidders without whistle blowers legislation. • Administrative review has no limit on when to lodge complaint and the subject of the complaint. • Inadequate notification of bidding opportunities to potential bidders. • During evaluation of bids, many bidders are eliminated at the preliminary stage. • Limited regulation of contractors affects quality and safety standards, contract management and access to credit facilities and joint training programs.

Way Forward • Review of the law to address the provisions that do not work well or that are prone to abuse. • Establishment of the Register of Providers to ensure that data on providers is more transparent and available to all actors in the procurement process, serves as a basis for monitoring their performance and compliance with the law. • Need to issue common specification standards for common user items • Shift from general compliance monitoring and focus on key sectors of service delivery such as health, education, roads, agriculture and water sectors with large procurement budgets that are susceptible to fraud and abuse throughout the procurement and delivery process.

Way Forward contd • Need to determine the risks and vulnerable points at each stage of the procurement/disposal process and put in place strategies to mitigate them. • Need to issue guidelines on the application of Preference and reservation schemes to promote participation of small/medium local businesses. • Need to regulate public private partnerships and public private competition. • Emphasise the importance of consistent political commitment and support from the highest levels of government . • Build Partnerships and establish linkages with civic organisations, oversight agencies and donor partners to accelerate the fight against corruption.

Way Forward contd • There is need to support efficient and secure information and communication between government to business by adopting a suitable ICT legislative framework that regulates e-procurement transactions, payments, data & network security, e-signatures and cyber crime. • In order to foster best modern commercial practices in public procurement it is essential to reform and harmonize regulatory regimes and procurement procedures across the EA territory based on modern and progressive procurement principles of transparency, economy, fairness and accountability.

Conclusion • Effective Procurement Systems in Uganda are only a part of a broader programme of country reforms that are aimed at: • Developing the rule of law • Improving the investment climate • Reducing corruption • Implementing e-government • Enhancing service delivery • Improving public financial management

TO BE CONTD.... Thank You for Your Attention

ENHANCING EFFECTIVENESS OF PUBLIC PROCUREMENT SYSTEMS: THE CASE OF UGANDA